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Executive Summary

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EXECUTIVE SUMMARY

Key Note defines the commercial television (TV) sector as any terrestrially broadcast, free-to-air TV service that derives the major part of its revenue from the sale of advertising air time. This includes Channel 3, Channel 4/S4C and Channel 5, all of which are broadcast by land-based transmitters. Increasingly, this sector is under threat from pay-TV operators in the cable and satellite sectors. In November 1998, Ondigital's terrestrial broadcast digital services were launched. The changes heralded by the onset of digital broadcasting are potentially huge. A new world of low-cost entry to broadcasting and a rapid expansion in the number of producers will pose serious questions for the established commercial broadcasters.
Between 1994 and 1998, total commercial terrestrial television revenues grew by a fairly modest 28.7 percent. This poor growth reflects a number of factors. The most significant of these has been the increased competition for advertising revenue as a result of the development of commercial radio and the increasing consumer penetration of non-terrestrial television, especially direct-to-home (DTH) satellite, the expansion of the cable television networks and, more recently, the start of digital terrestrial broadcasting. Key Note anticipates that in 1999 the total market will have grown by 6.3 percent to reach £2.7bn.
Increasing competition for audience share between rival broadcasters is leading to fragmentation of audiences. Whilst average viewing hours are fairly constant -- at around 24 hours per week per head of population -- the audiences attracted by individual programmes are shrinking. As the number of programme hours transmitted continues to rise, the size of the audience viewing each hour of programming is diminishing progressively. Over recent years, the British Broadcasting Corporation (BBC) and commercial terrestrial broadcasters have steadily lost market share to a growing cable and satellite sector as receiver and cable penetration levels have risen.
By November 1999, only three genuinely independent franchisees were operating -- Border Television Ltd, Channel Television Ltd and Ulster Television Ltd -- and four groups had emerged as the major players in this market: Carlton Communications PLC, Granada Group PLC, United News and Media PLC and Scottish Media Group PLC. Further consolidation is inevitable in the first few years of the new millennium and the smallest group, Scottish Media, may struggle to maintain its position. Ultimately, a situation in which Channel 3 is owned and operated by one company may be inevitable.
The trend toward consolidation in the commercial TV sector began in the early 1990s. However, the arrival of digital broadcasting is providing a new impetus to the process. All of the major players are vying with each other, both for audience share and revenues, and with the whole broadcasting industry in a state of flux, it is impossible to be certain of the final outcome. However, Key Note anticipates that by the year 2004, the commercial television sector will be worth approximately £3.09bn.

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

MARKET SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: Growth of in the Number of Extant ITC Commercial Television Licences, 1991 to 1998

Table 2: Average Viewing Hours in All Homes (hours:minutes and percent), August to October 1998-1999

Market Size

THE TOTAL MARKET

Table 3: Advertising Revenues of UK Commercial Terrestrial Television Broadcasters (£m), 1994-1998

Industry Background

RECENT HISTORY

DISTRIBUTION

EMPLOYMENT

TRADE ASSOCIATIONS

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 4: Main Media Advertising Expenditure by Independent Television Stations (£000), Year to June 1998 and 1999

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

INTRODUCTION

Table 5: Penetration of Television Ownership in Great Britain (000 adults), 1999

Table 6: Penetration of Television Ownership in Great Britain ( percent of adults), 1999

Table 7: Location of Installed Sets in the Home and Features of Installed Sets ( percent of adults), 1999

Outside Suppliers to the Industry

INDEPENDANT PRODUCTION COMPANIES

THE ADVERTISING INDUSTRY

Current Issues

CORPORATE ACTIVITY

DIGITAL TELEVISION

THE FUTURE OF THE BBC

Forecasts

INTRODUCTION

FORECAST 1999 TO 2004

Table 8: Forecast Advertising Revenues of UK Commercial Terrestrial Television Broadcasters at Constant 1999 Prices (£m), 1999-2004

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HOPPENSTEDT BONNIER INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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Last updated by Jacob van Eldik 22th February 2000